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Why Indians Need Regular Retirement Income Beyond Their Corpus
Saving money for retirement is important, but it may not be enough by itself.
People can live for many years after they stop working.
Prices may also rise, making saved money buy less over time.
Retirees therefore need a way to receive money regularly.
An annuity can turn savings into payments that may continue for life.
An immediate annuity can start paying soon, while a deferred annuity starts later.
Some annuities offer fixed payments, while others may partly depend on market performance.
Market-linked examples can pay more or less than expected, so their illustrations are not promises.
Rising life expectancy and inflation can cause retirees to outlive their savings.
Retirement planning should combine growth investments with income-generating instruments.
Annuities convert a lump sum or premiums into generally lifelong regular income.
Immediate annuities can begin payouts soon, while deferred annuities start later.
A Go Digit illustration shows higher potential payouts for an annuity partly linked to Nifty 50 performance, but returns are not guaranteed.
- Who
- Indian retirees and people planning for retirement.
- What
- The article explains why retirees need a sustainable regular income stream, not just a large savings corpus, and how annuities may help.
- Where
- India.
- When
- During working years for deferred annuities and after retirement for receiving income; immediate annuity payments may begin as early as the following month.
- Why
- Rising life expectancy and inflation can increase the risk that retirement savings will be exhausted or lose purchasing power.
Key facts
- Main retirement challenge
- Converting accumulated wealth into reliable and sustainable income.
- Annuity function
- An annuity converts a lump sum or premium payments into regular income, generally for the annuitant’s lifetime.
- Fixed annuity
- Provides predictable income for retirees prioritising certainty.
- Variable annuity
- Combines a guaranteed component with a portion linked to an index such as the Nifty 50.
- Illustrated contribution
- A 45-year-old pays ₹2 lakh annually for 10 years and begins pension income at age 61.
- Guaranteed illustration
- The 100% guaranteed annuity option illustrates an annual payout of ₹2,54,813.
- Market-linked illustration
- A 60%-guaranteed annuity with 40% linked to Nifty 50 performance illustrates annual payouts from ₹2,85,905 at an assumed 8% return to ₹3,54,713 at 12%.
- Important limitation
- The illustration is indicative only, does not represent future returns, and is subject to policy terms.
Quotes
Manwani
Retirement planning commentator quoted in the article
“Annuities can play a valuable role in retirement planning because they provide a structured lifelong income stream during retirement, helping retirees meet regular expenses with greater financial certainty.”
businesstoday.in
“A prudent retirement plan typically requires a combination of growth-oriented investments during the accumulation phase and income-generating instruments during retirement.”
businesstoday.in
Sources
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